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Entries in Deal Advisor (60)

Thursday
Jun182015
DateThursday, June 18, 2015 at 2:25PM

QTS Realty Acquires Carpathia Hosting 

QTS Realty Trust, Inc. (NYSE: QTS) announced on Wednesday, June 17th that it had closed its acquisition of Carpathia Hosting, Inc. for approximately $326.0 million.  The deal was originally announced on Wednesday, May 6th.  The acquisition significantly increases QTS’ data center footprint and grants access into new domestic and international markets. 


Valuation Analysis and Deal Metrics

   
Transaction Facts

  • QTS Realty is an industry-leading provider of hybrid cloud services and managed hosting. 
  • Carpathia Hosting is an industry-leading provider of colocation, cloud and managed services. 
  • Acquisition will be financed through approximately $290.0 million in cash and $36.0 million in capital leases that are expected to be funded on a leverage neutral basis. 
  • Carpathia Hosting has approximately 8 domestic and 5 international data centers. 
  • Carpathia’s portfolio of data centers equals approximately 66,700 square feet in total. 

Strategic Considerations

  • QTS Realty gains approximately 230 commercial and federal customers as a result of the acquisition.
  • Increases QTS’ average MRR per customer from $15,000 to $27,000.
  • $2.0 million in expected synergies for QTS are expected in 2016 as a result of the transaction.
  • Carpathia’s footprint in North America is complementary to support QTS’ Federal Government business.
  • Transaction provides QTS with entry into markets such as Toronto, Amsterdam, London, Hong Kong, and Sydney. 

JSICA’s Take

  • Acquisition of Carpathia Hosting will allow QTS Realty to add an international presence, as well as diversify its footprint across North America.
  • QTS Realty will be able to differentiate itself in industry channels such as Healthcare and Government, which are highly regulated.

 

AuthorJared Taylor | Comments Off | | | Print ArticlePrint Article
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Monday
Jun152015
DateMonday, June 15, 2015 at 12:43PM

H5 Data Centers Announces the Acquisition of Ashburn Data Center 

On Wednesday, June 10th, H5 Data Centers announced the acquisition of Ashburn Data Center.  The Ashburn Data Center is a wholesale datacenter located at 21800 Beaumeade Drive in Ashburn, Virginia.  

Transaction Facts

  • H5 Data Centers is a national colocation and wholesale data center provider.
  • Ashburn Data Center is approximately 70,000 sq. feet.
  • Location is within the Ashburn data center cluster
  • Ashburn Data Center has at least 8.5 megavolt amperes (MVA) of power capacity. 

Strategic Considerations

  • Data center is expandable to 100,000 sq. feet.
  • Pre-Leasing to international carriers, colocation and cloud service providers, and large enterprises has already begun.
  • Data center will be marketed as a powered shell or build-to-suit data center.
  • Josh Simms, CEO of H5 Data Centers, felt as though the location, along with the proximity to fiber providers, coupled with a fully customizable data center will help market the offering.

JSICA’s Take

  • Ashburn acquisition gives H5 the opportunity to serve either domestic or international wholesale customers that are looking for an East Coast data center. 
  • Acquisition adds to H5’s growing number of data centers, which now consists of approximately seven data centers in markets such as Atlanta, Charlotte, San Jose, San Luis Obispo, as well as Seattle.
AuthorJared Taylor | Comments Off | | | Print ArticlePrint Article
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Wednesday
Jun102015
DateWednesday, June 10, 2015 at 4:44PM

Atlantic Broadband to Acquire MetroCast Connecticut

On Monday, June 8th, Cogeco Cable Inc. (TSX: CCA) announced that its subsidiary Atlantic Broadband had acquired substantially all of the assets of MetroCast Connecticut for $200.0 million.  MetroCast Connecticut is a subsidiary of MetroCast Communications of Connecticut, LLC, in which Harron Communications, L.P. is the parent company. 

Valuation Analysis and Deal Metrics

 
Transaction Facts

  • Excluding the tax benefit, the value of the assets is approximately $165.9 million.
  • The transaction will be funded primarily through non-recourse debt issued by Atlantic Broadband.
  • Deal expected to close by Q3 2015.
  • Expected 2015 revenue for MetroCast is approximately $45.0 million.
  • 2015 adjusted EBITDA is projected to be approximately $21.0 million.
  • MetroCast Connecticut customers will be offered TiVo, as one of the results of the deal.

Strategic Considerations

  • MetroCast Connecticut has approximately 70,000 residential and commercial passings in the Connecticut area.
  • MetroCast Connecticut brings its connections of approximately 23,000 television, 22,000 internet, and 8,000 phone customers.
  • Transaction will further Cogeco Cable’s efforts for geographic expansion in the U.S. market.
  • Louis Audet, President and CEO of Cogeco Cable said “This transaction enhances our growth profile through the planned launch of new residential services such as TiVo and Metro Ethernet for businesses.”

 JSICA’s Take

  • Marks another acquisition in the cable industry by a non-U.S. company within the last month.   
  • Deal continues the streak of an active M&A market in the cable industry.
  • Acquisition should allow Cogeco and Atlantic Broadband to expand the geographic area that the companies serve. 
AuthorJared Taylor | Comments Off | | | Print ArticlePrint Article
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Thursday
Jun042015
DateThursday, June 4, 2015 at 5:15PM

Charter Communications Announces Merger with Time Warner Cable

U.S. cable provider Charter Communications (NASDAQ: CHTR) announced on Sunday, May 26th that it had reached an agreement to merge with one of its competitors, Time Warner Cable (NYSE: TWC) in a deal worth approximately $78.7 billion.  The deal marks Charter’s second major acquisition in the last few months, when the firm announced on March 31st that it had acquired over an 80 percent stake in Bright House Networks. 

Valuation Analysis and Deal Metrics

Transaction Facts

  • Charter Communications announced on May 26, 2015 that is was merging with cable competitor Time Warner Cable for approximately $195.71 per share. 
  • Charter will fund the deal primarily through equity, along with new and existing debt, as well as cash.
  • The transaction has an equity value of approximately $56.7 billion.
  • Expected to close by the end of 2015.
  • The deal includes a $2.0 billion breakup fee.

Strategic Considerations

  • Transaction is expected to generate approximately $800.0 million in cost synergies. 
  • Transaction may give Charter more leverage in negotiating contracts with programmers. 
  • Transaction significantly improves opportunities for Wi-Fi service offerings. 
  • Including Bright House and Time Warner Cable, Charter’s 2014 pro forma revenue would have increased from $9.1 billion to $35.7 billion. 
  • Transaction makes it so that Charter is able to compete with the heavy competition amongst the top cable companies in the video marketplace, which as of now includes Comcast, Dish, and DirecTV & AT&T (deal awaiting approval).

JSICA's Take

  • Charter-TWC transaction, when compared to some of the priced transactions in this industry since the beginning of 2012, comes in relatively in line with those multiples.
  • The average EV/LTM Revenue for priced transactions since 2012 was approximately 3.2x, compared to 3.4x in this transaction.
  • The average EV/LTM OIBDA for priced transactions since 2012 was about 8.6x, compared to 9.3x in this transaction.
  • Compared to last year’s proposed Comcast-TWC deal that was terminated, Charter paid 0.2x more EV/LTM Revenue and 0.5x more EV/LTM OIBDA to merge with Time Warner.
  • The deal seems to be much more attractive financially when compared to the recent cable deal in which Altice (AMS:ATC) agreed to acquire 70% of U.S. cable company, Suddenlink, which came in at roughly 3.9x EV/LTM Revenue and 10.0x EV/TTM OIBDA.

Currently, the FCC is looking into this transaction to determine how American consumers would benefit as a result of this merger, if it were to be approved.

AuthorJared Taylor | Comments Off | | | Print ArticlePrint Article
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Wednesday
Jun032015
DateWednesday, June 3, 2015 at 10:12PM

Altice Enters U.S. Cable Market with Suddenlink Deal

French telecom firm Altice announced on Monday, May 20th that it had agreed to buy a 70 percent stake of Suddenlink Communications valuing the company at $9.1b.  The deal marks the first purchase of a U.S. based cable property for the acquisitive Altice, a move spearheaded by founder and cable veteran Patrick Drahi.  Through the deal, Altice acquires a controlling stake in the seventh largest cable provider in the U.S. with operations largely concentrated in the south and midwest.

Valuation Analysis and Deal Metrics

Transaction Facts

  • Altice to acquire 70 percent stake of Suddenlink from BC Partners, CPP Investment Board and Suddenlink management valuing the company at $9.1b 
  • Existing shareholders retain 30 percent ownership (had acquired Suddenlink for $6.6b in 2012)
  • Deal financed with $5.10b in existing debt, $1.76b in new debt issued, a $500k vendor loan from BC Partners and CPP Investment Board and $1.2b in cash from Altice
  • $215m in annual synergies anticipated  
  • Total leverage including full synergies of 6.1x 2014 EBITDA
  • Expected close 4Q15

Strategic Considerations

  • Grants Altice entry into the U.S. cable market, laying the groundwork for future cable acquisitions and increased scale in the states   
  • Enhances geographic diversity of Altice’s revenue mix: France 64%; Portugal 14%; US 12%; Israel 5% and Other 5%
  • Balanced customer and revenue mix with 1.13m cable, 1.25m broadband and 600k telephone subs
  • Investments in fiber network over last several years provides Suddenlink with strong in-footprint competitive positioning to improve penetration, reduce churn and increase bundling

JSICA’s Take

Altice’s deal for Suddenlink continues the strong momentum of large-scale M&A in the U.S. cable market.  At 3.9x revenue and 10.0x trailing OIBDA, Altice appears to have paid a good premium for its entrance into the U.S. cable scene.  While Altice touts the potential for synergies at Suddenlink, its lack of existing network infrastructure and staff in the U.S. will make realizing these cost savings more difficult.  Drahi has been vocal that Altice is on the hunt for bigger deals in the U.S. that would grant it the scale to deliver meaningful cost savings.  Charter’s take out of Time Warner may have erased one target off of Altice’s wish list, but we do not expect Altice to be away from the deal table for long.  Cablevision and Verizon’s wireline ops have been rumored to be in the French telecom’s scope.  

AuthorAdam Brissette | Comments Off | | | Print ArticlePrint Article
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